• The prices of Gold, S&P 500 and Bitcoin have diverged in recent weeks, with the three assets no longer moving in sync.
• The correlation gap between traditional markets and the crypto-market has widened, possibly due to Silvergate news.
• A comparison of conventional asset and cryptocurrency price trends reveals their differing patterns.
Gap Widens Between Traditional Market & Crypto-Market
Recent weeks have seen a divergence in the prices of Gold, S&P 500 and Bitcoin, with the three assets no longer moving in sync. This correlation gap between traditional markets and the crypto-market has been attributed to Silvergate news and is at its highest since the FTX crash.
Price Trends Compared
To gain insight into this divergence, a comparison of conventional asset and cryptocurrency price trends can be made to determine their differing patterns. According to a report by Santiment, while Gold and S&P 500 saw some improvement on March 6th 2021, BTC’s price continued to struggle. The S&P 500 started rebounding from March 2nd on a daily timeframe chart after several weeks of downward trend seeing an increase of over 3%. At press time it was selling at $4,059 with a weak bull trend indicated by its Relative Strength Index (RSI) line crossing the neutral line upwards. Meanwhile BTC’s RSI line remained below the neutral line indicating difficulty bouncing back after its 5% loss on March 3rd 2021 trading at around $22,500.
The Silvergate episode has put crypto-friendly bank Silvergate in focus this week due to reports that it is facing health issues. The bank had previously allowed clients to borrow money against their crypto holdings but had recently changed its stance which likely contributed towards this widening gap between traditional markets and cryptos further pushing them out of sync.
The crypto-SPX correlation refers to the relationship between cryptocurrencies such as Bitcoin or Ethereum and the S&P 500 index – A standard measure of stock market performance in America which also takes into account Gold’s price change for better understanding. Over time it appears that there has been significant shift in degree of correlations between these two asset classes leaving open questions as how much wider did this gap become as well as what caused it?
In conclusion it appears that there have been significant shifts in degree of correlations between traditional markets and cryptos over time resulting in their prices diverging from one another more than ever before likely attributed to recent events such as Silvergate news as well as BTC’s drop on March 3rd 2021 which may have further widened this gap creating new highs since FTX crash thus leaving open questions as how much wider did this gap become as well as what caused it?